full year results. - asxaug 27, 2020 · macquarie telecom group key business highlights. revenue...

Full Year Results.

27 August 2020

Authorised for release by the board of directors of Macquarie Telecom Group Limited

2020.

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Macquarie Telecom Group

Business Summary.

Revenue EBITDA

2

69%

Revenue EBITDA

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Key Business Highlights.

Revenue

$266.2m

EBITDA

$65.2m

NPAT

$13.5m

EPS

63.6 ps

● Six consecutive years of revenue and EBITDA growth

● EBITDA CAGR of 16.8% over 3 years (pre-AASB16 9.5%)

● Resilient during COVID-19 pandemic

● Strong growth in Cloud and Government business units

● Agreement with ATO to provide Secure Internet

Gateway (SIG) and cyber security services

● Construction of Intellicentre 3 East (IC3 East) is

advanced and on track to accept sales from late 2020

3

| Full Year Results 2020

• Increased syndicated debt facility to fund the build of IC3 data centre and undrawn balance of $92m

• Hosting revenue continued to grow on the back of strong sales and order implementation

• Telecom continue to build fibre networks and migrate services to the nbn in line with plan

• Primary focus on customer service with an ASX leading net promoter score of +72

• NPAT reduced by higher depreciation from capex investment driving future growth

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Macquarie Telecom

● #1 in Asia Pacific for SDWAN

● 2/3 of Macquarie customers successfully migrated to NBN

● Strong cross sell of Cloud Services solutions into Telecom’s

customers

● Launch of SIP Voice for Teams

Business Highlights Summary.

Macquarie Cloud Services

● Continues to grow successfully leveraging the Hybrid IT

megatrend

● Managed Azure Practice, a pathway to public cloud

● 2019 Dell EMC Rising Star award

● 2020 Great Place To Work for 2nd consecutive year in top 20

Macquarie Government

● 42% of Australian Government agencies

● ASD certified cloud for classified / protected workloads

● ATO cyber security contract, $20m over the initial 3 year term

● Upgrades to Government Secure Internet Gateway, across our

data centres

Macquarie Data Centres

● Construction of IC3 East on track

● Macquarie Park Data Centre Campus expansion to 43 MW

● Canberra DC development of IC5 on track

● 2H FY20 includes full year impact of Stage 3 of Fortune 100

customer

● Significant demand from hyperscale customers

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A Differentiated Offering.

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Customer focus.

• Our continued focus on providing a great

customer experience is core to our service

offering & differentiation

• Macquarie’s net promoter score (NPS) is 72

for 2H20 – Australian leading NPS

• NPS is the measure of customer experience

that is assessed on a scale of -100 to +100,

where a score of greater than +50 is

excellent

• NPS is calculated on the single question

"how likely is it that you would recommend

our company to a friend or colleague?"

• Growth in our NPS is good for our investors

Company purpose.

To make a difference in markets

that are underserved and

overcharged.

+72NPS

6


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Quality Infrastructure.

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Data Centre Portfolio.

Macquarie Data Centre’s projected total load is 50MW

comprising of

● Macquarie Park Data Centre Campus 43MW: IC2, IC3 East and

IC3 West;

● Macquarie Canberra Data Centre Campus 4MW: IC4 and IC5;

and

● Existing IC1 in Sydney CBD 3MW

Intellicentre 1

Sydney

Intellicentre 3 East

Macquarie Park

Intellicentre 5 South

Bunker, Canberra

Intellicentre 2

Macquarie ParkIntellicentre 4 Bunker,

Canberra


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IC3 East Progress.

IC3 East build is progressing well and we

continue to expect completion in early

2021.

To meet the needs of prospective

wholesale customers we have decided

to:

● Bring forward additional total load of 4MW

in IC3 East to increase capacity to 6.4MW;

● Increase the overall IC3 East capacity to

18MW; and

● Review options to expand Campus

capacity


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IC5 South Bunker Canberra.

● Construction due to complete by December 2020

● Built to Federal Government security standards

(SCEC Zone 5 ready) and redundancy (Tier IV)

● Stage 1 investment of $17m

● Campus Total Load 4MW comprising:

– Existing IC4 Bunker 1MW

– IC5 South Bunker (Stage 1) 1.5MW

– IC5 North Bunker (Stage 2) 1.5MW

– Plus additional capacity to expand

● Australian Sovereign data centres to support

expected growth in Federal Government business


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Our private cloud is a key source of data centre utilisationand generates higher revenue per rack.

Underlying infrastructure

anonymised as we sell

outcome focused solutions

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Financials.

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Financial Results.

• Inter-segment revenue relates to services provided by the Hosting segment to the Telecom segment, eliminated on consolidation

• EBITDA post AASB16 has increased by $8.0m as rent is excluded under AASB16. Instead lease obligations are recognised on the

balance sheet as right of use assets and lease liabilities. This results in $6.7m of depreciation of the right of use asset and $3.5m

interest from the lease liability that is recognised outside of EBITDA. The impact to NPAT is ($1.8)m.

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Group Financial Performance.

• Over the last 3 years:

– Revenue CAGR of 6.8%

– EBITDA CAGR of 16.8% (excluding AASB16, 9.5%)

– EBITDA margin 24.5% (excluding AASB16, 21.5%)

• Impact of AASB16 increases EBITDA by $8.0m (as per

graph)

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COVID-19 Impact

• Performance has been resilient to the external business

and economic pressures arising from the measures to

control the COVID-19 pandemic

• No government subsidies or other incentives received as

a result of COVID-19

115118.6

121

125.6

131.9134.3

1H18 2H18 1H19 2H19 1H20 2H20

Group Revenue ($m)

22.5 25.3 25.4 26.7 27.6 29.6

31.633.6

1 H 1 8 2 H 1 8 1 H 1 9 2 H 1 9 1 H 2 0 2 H 2 0

Group EBITDA ($m)

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Financial Performance – Hosting.


− Revenue CAGR of 16.8%

− EBITDA CAGR of 29.6% (excluding AASB16 19.4%)

− EBITDA margin of 34.5% (excluding AASB16, 29.3%)

• Highly leveraged business with improving margins as

infrastructure utilisation increases

• Strong Government cyber security growth and Cloud growth

• Impact of AASB16 increases EBITDA by $6.5m (as per graph)

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COVID-19 Impact

• Acceleration of mega trend to cloud and data centres

as well as cyber-security resulting in strong sales by

Government and Cloud Services

• Additional bandwidth for staff working from home

• Focus on business continuity including cloud backup

and cyber security

• Strong growth in Hyperscale procurement activity and

shift in online collaboration, connectivity, purchasing

behaviour across all demographics

13.4 13.415.3 16.9 18.5 20.0

21.723.3

1 H 1 8 2 H 1 8 1 H 1 9 2 H 1 9 1 H 2 0 2 H 2 0

Hosting EBITDA ($m)

46.149.5

5357.6

62.767.6

1H18 2H18 1H19 2H19 1H20 2H20

Hosting Revenue ($m)

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Financial Performance – Telecom


− Revenue CAGR of (0.5)%

− EBITDA CAGR of (1.9)%) (excluding AASB16 (5.6)%)

• Telecom EBITDA margin of 14.3% (excluding AASB16 13.3%)

• Significant investment to facilitate migration to the nbn

• Impact of AASB16 increases EBITDA by $1.5m (as per graph)

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COVID-19 Impact

• Change in mix in Telecom products from higher margin

fixed voice to lower margin mobile due to WFH

customer workforce activity

• Focus on cost base to meet the change in product mix

and activity

9.1

11.910.1 9.8 9.1 9.6

9.9 10.3

1 H 1 8 2 H 1 8 1 H 1 9 2 H 1 9 1 H 2 0 2 H 2 0

Telecom EBITDA ($m)

71.1 71.4 70.4 70.4 71.8 69.3

1H18 2H18 1H19 2H19 1H20 2H20

Telecom Revenue ($m)

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● Growth Capex is for the building of new

data centre capacity, increased power

supply, new technology creation &

transformational investment

● In the Hosting business, a current

example is the Secure Internet

Gateway services for the ATO

● In the Telecom business, a current

example is investment in SDWAN and

nbn migrations

● IC3 spend not included in growth

capex

● Growth Capex was $14.8m in FY20

(ex IC3)

● Customer Growth Capex is for

additional cabling, racks,

servers & storage that enable

us to provision new customer

orders

● Customer Growth Capex was

$38.8m in FY20 reflective of our

data centre sales success &

product mix

Maintenance

Capex.Growth Capex. Customer Growth

Capex.

● Most of the remaining Capex is

infrastructure refresh and

internal software development

known as Maintenance Capex

● Maintenance Capex was

$12.3m for FY20

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Balance Sheet & Cash Flows.● Cash and cash equivalents of $37.9m. Negotiated

increase to syndicated debt facility with undrawn

portion of $92m available for investment and build of

IC3 & IC5 data centres

● FY20 capital spend of $65.9m ex IC3

- Growth Capex $14.8m

- Customer Growth Capex $38.8m

- Maintenance Capex $12.3m

● IC3 building development expenditure is either classified

as Other Receivables for the core & shell or as WIP. Upon

practical completion Other Receivables will form part of

the development agreement with Keppel

● Key impact of AASB16 has been to:

- recognise $76.1m of Right-of-use assets (non-current)

offset by $75.8m of lease liabilities on the balance sheet

at 30 June 2020

- $7.9m of interest and lease payments in financing

activities in the cash flow (with nil cash impact)

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$m FY19FY20 (Pre

AASB16)

FY20 (Post

AASB16)

Cash & Cash Equivalents 17.1 37.9 37.9

Current Assets 29.5 44.5 44.0

Non Current Assets 114.7 165.9 242.4

Total Assets 161.3 248.3 324.3

Creditors 34.1 57.4 57.4

Other Liabilities 20.4 67.0 144.8

Total Liabilities 54.5 124.4 202.2

Total Equity 106.8 123.9 122.1

$m FY19FY20 (Pre

AASB16)

FY20 (Post

AASB16)

Cash Flows from Operating Activ ities 38.6 38.0 45.9

Cash Flows from Investing Activ ities (45.8) (64.1) (64.1)

Cash Flows from Financing Activ ities (6.1) 47.0 39.1

Net increase /(decrease) in cash (13.3) 20.8 20.8

Opening Cash and Cash Equivalents 30.3 17.1 17.1

Closing Cash and Cash Equivalents 17.1 37.9 37.9

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Outlook.19

● We are focused on maintaining industry leading Net Promoter Score greater than +70 across all

business segments

● The Company’s EBITDA will continue to grow in FY21. However, 2H FY21 will be relatively flat compared

to 1H FY21 driven by investment in sales and operational resources to support continued growth

● There are ongoing opportunities in the Telecom business as customers look to strengthen online

footprints and their customer facing options through demand for new technologies, including SDWAN

and business nbnTM

● We will continue to develop public cloud capability to enhance the current hybrid cloud offering

● Continued demand from Federal Government Agencies gives great confidence for future growth in

the Government Business. The further investments to expand capacity in IC5 Bunker in Canberra will

provide capability and scope to meet this demand


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Outlook.20


● Depreciation and amortisation (post AASB16) for FY21 is expected to be $45 to $48 million.

Telecom depreciation will increase from $15.3 million in FY20 to $17 to $18 million in FY21 and

Hosting from $26.0 million in FY20 to $28 to $30 million in FY21

● The Company plans to make a significant investment in growth and customer growth capex

during FY21. Total capex is expected to be between $140 to $148 million consisting of:

– Growth Capex - $100 to $104 million (including $82 to $85 million for IC3)

– Customer Growth - $22 to $24 million

– Maintenance Capex - $18 to $20 million

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Outlook.21

● Telecom capex will decrease from $22.8m in FY20 to $15 to $16m in FY21 as the core network

roll out is completed (growth capex)

● The Macquarie Park Data Centre Campus will provide 43MW in total load on completion.

Development of Macquarie Intellicentre 3 (IC3) East, expands the Group’s data centre

capacity from a total load of 10MW to 28MW and is progressing to plan. The campus is

designed to meet the growing needs of global hyperscalers and cloud, enterprise and

government customers

● As announced in June, to improve investor visibility of the value being created, Macquarie

Data Centres will be reported as a separate segment from 1 July 2020


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Disclaimer.

No express or implied warranty is given as to the accuracy or completeness of theinformation in this document or any corresponding presentation. This document maycontain forward looking statements that, while used in good faith, reflect MacquarieTelecom Group Limited’s current intention, plans, expectations, assumptions and beliefsabout future events and are subject to risks, uncertainties and other factors, many ofwhich are outside the control of Macquarie Telecom Group Limited.

Factors that could cause actual results to differ materially from the expectationsexpressed or implied in the forward-looking statements include known and unknownrisks. Because actual results could differ materially from Macquarie Telecom GroupLimited’s current intentions, plans, expectations, assumptions and beliefs about thefuture, disclosures herein should not be relied upon as advice to investors or potentialinvestors and should be viewed with caution.


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full year results. - asxaug 27, 2020 · macquarie telecom group key business highlights. revenue...

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